Water deregulation: digital leaders urgently required

Large companies continue to struggle with implementing digital transformation

As reported by Utility Week, a new management DNA may be required in the deregulated non-domestic water sector post 1April. In particular, there will be a growing need for customer-focused managers.

Reporting from Water UK’s City Conference, Perry Noble, partner at Hermes Infrastructure, is quoted as saying “with the industry transitioning from its engineering roots into a more customer focused environment, new boardroom skills will be in increasing demand. We are increasingly looking outside of the sector to bring different DNA to the gene pool of senior management, particularly from highly regulated environments with a greater longevity of being very customer focused”.

We would agree fully with Perry’s thoughts but the need for new skills goes a lot wider than this in our view. In addition to developing more customer focused boardrooms, there is an urgent need to strengthen digital leadership capabilities in the sector.

As stated in our previous Utility Week post – Water deregulation: digital transformation is critical – there will be winners and losers in the open market.

Winners will be water utilities who leverage the full potential of digital technology to drive competitive advantage in at least five key areas: engaging and connecting with customers; building digital operating advantage; deriving actionable insight from data; supporting collaboration and knowledge sharing; business transformation.

The need for utilities to leverage the full potential of digital technology will also be fully recognised this years Utility Week Live event, which has ‘transforming utilities’ as its main theme.

For the industry to transform, a new breed of senior executive is urgently required – digital leaders.

Leaders who combine high-level business knowledge, experience and understanding with the ability to develop digital transformation strategies fully aligned with and supportive of agreed business goals and objectives. Leaders with the confidence and personal skills to drive organisational change.

Unfortunately, the evidence suggests major skills shortages in this area, not only in the utility sector but across a broad range of industries.

Early studies in this area by Capgemini Consulting/MIT Center for Digital Business (2013) and Forrester Research (2014) identified a digital execution crisis with missing digital skills being the key hurdle to successful digital transformation in over three-quarters of the companies surveyed. Successful digital transformation requires the full support of chief executives to drive investment priorities but few chief executives fully understand digital. Many executives reported that their firms were woefully unprepared to deal with the on-coming digital onslaught.

More recent research suggests that little has changed over the last three or four years, despite the growing awareness of the need for change.

In a recent interview, Didier Bonnet, one of the main authors of the book ‘Leading Digital’, published two years ago, stated that most large companies continue to struggle with implementing digital transformation. The majority of boards still have a long way to go before they master the digital challenge.

Board evolution for the digital era, according to Bonnet, has been very slow, with almost 80 per cent of company directors stating that they are not satisfied that their boards have sufficient digital proficiency to anticipate the competitive technological threats and opportunities on the horizon. Fewer than 20 per cent feel fully equipped to deal with technology challenges.

In a more competitive open market, water utility boards will require what Bonnet calls “transformational digital talent” – people who fully understand the power of new technologies but also the complexity of using these technologies for business impact in large complex organisations.

Water chief executives and their teams are becoming more aware of the need for digital transformation but how many are tackling it in any meaningful way? With strong evidence emerging that leading-digital-companies outperform others, we will soon find out who is digitally ready.